Assessing Officer couldn't step into shoes of assessee to decide amount to be paid to avail a particular services

[2018] 96 taxmann.com 272 (Hyderabad - Tribunal)

Facts:

• The assessee-company was an investment company and filed its return of income. It was found by Assessing Officer (AO) that a sum of Rs. 18 lakhs was claimed towards service charges paid to company SRSR.
• Said service charges were paid for the services like advisory services in its business area, accounting services, collection of interest and dividend, taxation, ROC related matters and maintenance of its land properties, etc.
• AO was of the opinion that the Directors of SRSR were related persons to the Directions of assessee-company. He estimated sum of Rs. 3 lakhs at Rs. 25,000 per month as reasonable expenditure considering the nature and volume of business of assessee-company and the nature of services rendered by SRSR. The balance of Rs. 15 lakhs was disallowed under section 37(1).
• CIT(A) confirmed the disallowance. Aggrieved-assessee filed the instant appeal before the ITAT.

The ITAT held in favour of assessee as under:

• There was no power of AO to reduce the claim. He could only examine whether the amount could be allowed in full or not. There was no dispute that the amount was paid for the purpose of business, as Assessing Officer had allowed the amount partly.
• Since the provisions of section 37(1) do not have any restriction to allow the amount partly, so long as the expenditure is incurred for the purpose of the business wholly and exclusively, the same has to be allowed.
• The restrictions placed in other provisions like that of section 36(1)(iii) for the purpose of interest, under section 40A (expenses or payment not deductible in certain circumstances) and also restrictions placed under sections 30 and 31 won’t apply to the facts of the case.
• Since the restrictions under section 37(1) were not applicable, the whole of the amount claimed was to be allowed as the expenditure was not of personal or capital in nature, as provided in the section itself.

Cleaning of agricultural produce away from agricultural farm not entitled to GST exemption: AAR

Rara Udhyog, In re- [2018] 95 taxmann.com 118 (AAR- Rajasthan) 

The assessee is engaged into the activities of cleaning of the various agriculture produce like Saunf (Fennel) Dhaniya (Coriander), Jeera (Cumin seeds), etc. It removes the various impurities which do not change the essential character of the agriculture produce and makes the product marketable for primary market. It filed an application for Advance Ruling on the issue whether such activity would attract nil rate of tax? 

The Authority for Advance Ruling held that the exemption is available only on those processes which are carried at Agriculture Farm and which do not change the essential characteristics of the Agricultural Produce but only make it marketable for primary market. In the given case, the activity of cleaning using specific machines are installed at its premises, i.e., away from Agricultural farm. Therefore, the activity of the assessee will not attract nil rate of tax.

Determination of place of supply is kept out of purview of Authority for Advance Ruling

Utility Powertech Ltd., In re [2018] 95 taxmann.com 88 (AAR-Chhattisgarh) 

The assesse is registered in the State of Chhattisgarh. It received a contract for supply of manpower from NTPC BHEL Power Project Pvt. Ltd. (NBPPL), Andhra Pradesh. It procured and deputed the manpower in the State of Andhra Pradesh. It filed an application for Advance Ruling on the issue whether it is required to charge IGST or CGST and SGST on such services and if IGST is charged on such transaction, will the credit of IGST be available to NBPPL against their output tax liability. 

The Authority for Advance Ruling, Chhattisgarh is not the proper authority to pronounce the ruling regarding the availability of ITC to a firm which is registered outside the State of Chhattisgarh. Therefore, it is held that the determination of place of supply has been kept out of the purview of Authority for Advance Ruling (AAR) stipulated under the provisions of section 97(2) of the CGST Act, 2017.

GST is chargeable on surplus profit transferred by beer manufacturer to brand owner

United Breweries Ltd., In re - [2018] 95 taxmann.com 87 (AAR-Karnataka) 

The assessee entered into an arrangement with contract bottling units (CBU) for using its brand name on beer bottles. The CBU had manufactured the beer using the brand name of assessee and supplied such beer to market. The assessee filed an appeal for Advance Ruling on the issue whether the sale of beer by CBU under its invoicing would be considered as supply of services and Whether GST is payable by the Brand owner on the surplus profit transferred by the CBU to the assessee out of such manufacturing activity? 

The Authority for Advance Ruling held that the CBU is not engaged in supply of service to the assessee. Further, the GST would be payable by the assessee, i.e., brand owner on surplus profit transferred by the CBU. The supply of service to the CBUs is classified under Service Code 999799 and would be taxable at the rate of 18% GST. 

Hydent-K Toothpaste is classifiable as medicament

'Hydent-K Toothpaste' is classifiable as medicament under Heading No. 3003.10 

Time Pharma v. CCE, Thane-II - [2018] 94 taxmann.com 439 (Mumbai) 

The assessee was engaged in the manufacture of a product ‘Hydent-K toothpaste’. It was made of Potassium Nitrate BP and Sodium Monofluorophosphate USP. It classified the said product as Medicament under Heading No. 3003 10. 

The department held that the product in question was classified as Toothpaste under Heading No. 3306 10. The assessee filed an appeal before the Commissioner (Appeals) who allowed the appeal in favour of revenue. Being aggrieved by the order, it filed an appeal in the Tribunal. 

The Tribunal held that only pharmacopeia drugs were used in the product ‘Hydent-K toothpaste’. Therefore, the product in question was classified as Medicament under Heading No. 3003 10. Hence, the appeal filed by assessee was to be allowed.

Cold storage services in respect of agricultural produce exempt from GST: AAR

FACTS:

The applicant is the owner of the cold storage house and provides storage and warehousing facilities to variety of agriculture produce. The applicant submitted an application, seeking an advance ruling on taxability of storage services for various products namely Fennel (Saunf), Coriander (Dhaniya), Cumin Seeds (Jeera), Carom Seeds (Ajwain), Fenugreek Seeds (Kasoori Methi), Mustard Seeds (Sarson), Brown Mustard Seeds (Rai), Nigella Seeds (Kalonji), Poppy Seeds (Posara Dana). 

HELD:

The Court held that above mentioned goods fall under definition of Agricultural Produce, and therefore supply of cold storage service in relation to these products is exempt from levy of GST. However, if any processing is done on these products as is not usually done by a cultivator or producer at farm level, then these would fall outside the definition of agricultural produce and in such case, supply of cold storage service in relation to these would remain chargeable to GST.

[2018] 95 taxmann.com 122 (AAR- RAJASTHAN)

Extension of Last Date for filing GSTR-3B for July, 2018 extended till 24th August, 2018 for all class of taxpayers

The last date for Filing of Return in FORM GSTR-3B for the month of July, 2018 has been extended till 24thAugust, 2018 for all class of taxpayers by the Competent Authority. The relevant Notification for the same shall be issued shortly.